After a late sell-off Wednesday afternoon, the Chinese markets opened in negative territory, with the Shanghai composite down some 1.68 per cent while the Shenzhen composite fell 1.67 per cent after retracing some early losses. At market open, Shanghai was down 2.73 per cent and Shenzhen saw losses of 3.37 per cent.

Hong Kong's Hang Seng index was down 1.87 per cent.

Offering some sign of stability in a generally volatile market, the People's Bank of China (PBOC) set Thursday's yuan mid-point rate at 6.5616, compared with Wednesday's fix of 6.5630. The dollar-yuan pair was nearly flat at 6.5777.

Japan's Nikkei 225 erased all of Wednesday's 2.88 per cent gain and plunged 3.86 per cent, weighed by commodities and machinery sectors, which were all down between 3 and 4 per cent. Earlier, it fell as low as 4 per cent before paring back some of the losses. South Korea's Kospi traded down 1.40 per cent.

Down Under, the ASX 200 dropped 1.77 per cent, with energy and financials sectors sharply down 3.18 and 1.69 per cent respectively. All sectors were in the red except for gold, which saw an uptick of 4.40 per cent.

In Singapore, the Straits Times Index (STI) tumbled when trading opened, with the benchmark down 1.82 per cent, The Straits Times reported.

Japan core machinery orders decline

In Japan, core machinery orders in November fell 14.4 per cent from the previous month, according to official data, down for the first time in three months. The data is regarded as an indicator of capital spending and fell more than market expectations for a 7.9 per cent decline.

Shares of Sumitomo were down as much as 6.54 per cent after reports said the company declared it would record a 77 billion yen (S$944 million) loss for the October-December quarter from a nickel project in Madagascar.

The dollar-yen pair again traded 0.22 per cent lower at 117.40. That likely weighed Japanese exporters, which traded down between 3 and 5 per cent.

Elsewhere Samsung Electronics was reported to have said it would mass produce Qualcomm's new Snapdragon 820 mobile processors, boosting its manufacturing business. Samsung shares were down 0.87 per cent.

Oil prices at 12-year lows

In Asian trade, the globally traded Brent was down 1.19 per cent at US$29.95 (S$43.11) a barrel, after finishing at $30.31 in US trade, marking the first time since Dec. 30, 2015 it's settled below US crude's level. US crude futures, which briefly fell below the psychologically key $30 level overnight, was down 0.43 per cent at $30.35 a barrel.

While data showed US crude inventories rose 234,000 barrels last week, less than expected, it was overshadowed by a reportedly massive build-up in gasoline at 8.4 million barrels and over 6 million in distillates, which includes diesel and heating oil.

Lance Kawaguchi, managing director and global sector head for the resources and energy group at HSBC, said the pain from slumping oil prices was spreading to the broader energy sector.

"Crude oil prices at a 12-year low pile the pressure on energy-related companies to accelerate actions to cut costs and restructure," he said.

"It intensifies the squeeze on working capital and makes effective cash management all the more important."

Energy plays in Asia traded mostly lower, with Santos down 7.88 per cent, Woodside Petroleum down 2.11 per cent and Oil Search lower by 2.22 per cent. In Japan, Inpex was down 5.15 per cent and Japan Petroleum was down 2.96 per cent. South Korean oil plays were mixed, between up 0.37 per cent and down 0.63 per cent.

Japan's biggest refiner JX Nippon Oil & Energy, the core business unit of JX Holdings, said it cut its crude oil refining plan for domestic use in January by 3.6 per cent from its original plan due to sluggish kerosene demand after a mild winter, Reuters reported. Shares of JX Holdings were down 4.09 per cent. Overnight on Wall Street

Major indexes in the US were sharply in the red, with the S&P 500 slipping below the 1,900-point benchmark and officially entering correction territory, down 11.29 per cent from its May 21, 2015, closing high of 2,130.82.

The S&P 500 shed 48.40 points, or 2.50 per cent, to drop to 1,890.28 on Wednesday.

The Dow Jones industrial average closed down 364.81 points, or 2.21 per cent, at 16,151.41 while the Nasdaq composite was down 159.85 points, or 3.41 per cent, at 4,526.06.

On the data front, Australia released its December employment data. After adding an unexpected 71,000 jobs in November, the economy shed 1,000 jobs on-month, lower than market expectations. After the data, the Australian dollar popped up to as high as $0.6961, compared with around $0.6927 before the data, but the currency quickly retraced the gains to trade around $0.6928.

Elsewhere, the Bank of Korea kept its interest rates unchanged, in line with expectations. Indonesia's central bank is also set to announce its monetary policy decision later in the day.